Investors: Canadian Oil Firm Has False ESG Claims

Published on:
by KnowESG
KnowESG_Investors: Canadian Oil Firm Has False ESG Claims
Image courtesy of Freepik

A complaint has been filed with the FBI's white-collar crime division and U.S. financial regulators accusing Reconnaissance Energy Africa (ReconAfrica) of using false environmental claims to mislead investors.

ReconAfrica is presently conducting oil drilling operations in a region of ecological sensitivity in Namibia. The drilling activities are positioned near the Okavango Delta, an area designated as a UNESCO World Heritage Site. It is not only one of the largest protected zones for endangered wildlife but also holds significant cultural importance for the San people.

Several advocacy groups, including the Economic and Social Justice Trust of Namibia, Kapinga Kamwalye Conservancy, Muduva Nyangana Conservancy, and the Ncaute Community Forest, allege that ReconAfrica has distorted important environmental, social, and governance (ESG) metrics in a thorough 25-page complaint that Canada's National Observer obtained.

These ESG metrics, which serve as benchmarks for environmentally and socially friendly plans, have been misrepresented while ReconAfrica continues its drilling activities. Despite multiple requests for comment, ReconAfrica has not responded to inquiries.

Central to the complaint is the accusation that ReconAfrica has manipulated its climate-related credentials to attract funding for its exploratory drilling. The company informed investors through a fact sheet that "ESG is our fundamental operating principle" and that it is committed to achieving carbon-neutral emissions.

Moreover, ReconAfrica has highlighted its nominations and recognitions for ESG best practices, including an "ESG Leader Award" at the African Energy Awards in 2021 and a nomination acknowledging its "corporate social responsibility" at the Association of International Energy Negotiators (AIEN) in 2023.

Nonetheless, the complaint lodged with regulators on Tuesday questions the credibility of the Africa Energy Awards, suggesting that they are overseen by NJ Ayuk, a promoter affiliated with ReconAfrica.

Ayuk, a Cameroonian attorney, chairs the African Energy Chamber and has previously been found guilty of impersonating a U.S. congressman in 2007.

The complaint also points out that the AIEN awards, which nominated ReconAfrica for its responsible leadership, are sponsored by the law firm of ReconAfrica founder Jay Park, called Park Energy Law.

The complaint asserts that ReconAfrica's deliberate efforts to create a false impression about their drilling and ESG programme have significantly skewed the information available to potential investors.

Canadian activist Rob Parker, associated with the Economic and Social Justice Trust of Namibia, underlines that ReconAfrica's purported "world-class" ESG programme has drawn considerable attention, but upon closer examination, the claims appear unsubstantiated.

The complaint presents evidence that investors have taken ReconAfrica's ESG claims seriously, citing social media screenshots of company representatives and investors discussing these claims as indications of the company's investment appeal.

One investor on ReconAfrica's Discord platform mentioned that the company's "ESG initiatives are what make me comfortable" with the investment. Others speculated that ReconAfrica's $10-million commitment to ESG initiatives signalled confidence in a substantial fossil fuel discovery that could validate its ESG commitments.

This new complaint submitted to U.S. regulators follows similar grievances raised in Canada. The British Columbia Securities Commission (BCSC) previously conducted a review of ReconAfrica, as indicated by a partially redacted memo seen by Canada's National Observer.

However, the BCSC later confirmed that ReconAfrica was not under investigation. Additionally, the Royal Canadian Mounted Police (RCMP) announced an investigation into ReconAfrica last year in response to allegations of fraud and corruption, though the current status of this investigation remains unclear.

Regarding the RCMP investigation, a spokesperson stated that the organisation does not confirm or deny ongoing investigations unless criminal charges are pressed. ReconAfrica has consistently denied all allegations against it.

ReconAfrica has encountered substantial criticism over its operations for several years. In 2021, the company sought assistance from Global Affairs as it faced intense scrutiny following critical reports in the Globe and Mail and National Geographic.

These reports revealed numerous concerns related to environmental impact and the neglect of community concerns. Global Affairs organised various meetings with ReconAfrica throughout 2021, even arranging a meeting with United Nations Ambassador Bob Rae, who guided the company on how to navigate criticism in Namibia and Botswana.

Kapinga Kamwalye chair Thomas Muronga emphasised the importance of sustainable development, declaring that their lands and resources are not sacrifice zones for foreign corporations to exploit and that the era of colonialism is over.

For more company-related news

To view and compare company ESG Ratings and Sustainability Reports, visit our Company ESG Profiles page.

Source: National Observer


Companies Headlines

Nestlé: New Sustainable Choc at Airports

Nestlé: New Sustainable Choc at Airports

PepsiCo Speeds Up Sustainability Efforts in 2023 Report

PepsiCo Speeds Up Sustainability Efforts in 2023 Report

Arco Gets Gold Medal for Sustainability from EcoVadis

Simplify Carbon Accounting with Workiva Carbon

Ingka Group's Climate Goals Get Approval from SBTi

ENEOS, Mitsubishi Team Up for H2 and Decarbonised Fuels

Marubeni Delivers First Co-Processed SAF in Japan

Enserva Launches OnePath, Simplifying ESG Reporting

OMV's New Brand Identity Reflects Sustainability Focus

Chemours Leads Sustainability with Science-Based Goals